Pfizer, Allergan in deal talks to create drug giant

Pfizer and Botox maker Allergan are discussing a potential deal that could be the biggest of 2015, a year marked by a rapid-fire pace of megadeals, particularly in health care.

A merger could enable Viagra maker Pfizer, the world's second-biggest drugmaker by revenue, to surpass Switzerland's Novartis AG and regain the industry's top spot.

It would also add Allergan's brand-name medicines for eye conditions, infections and heart disease to Pfizer's extensive portfolio of vaccines and drugs for cancer, pain, erectile dysfunction and other conditions.

In separate statements, both companies on Thursday said they were in "preliminary friendly discussions". Allergan Plc said there's no certainty that the talks with Pfizer Inc will lead to a deal.

Allergan, based in Dublin, is in the process of selling its generics unit to Israel's Teva Pharmacueticals Industries Limited, the world's top generic drugmaker.

Pfizer has been hurt by a wave of generic versions of one-time blockbuster drugs like cholesterol fighter Lipitor entering the market, reducing company sales by a total of US$28 billion from 2010 through next year.

Pfizer's US$49.6 billion in revenue last year dwarfs Allergan's US$4.6 billion, but a deal for Allergan would allow for additional growth and Pfizer might pursue an 'inversion'. That's a tax-saving manoeuvre in which a US company reincorporates in a country with a lower corporate tax rate.